It seems to the Commission therefore that an overall pay adjustment should not be made for Classification Act employees at this time and preferably not until a thorough analysis and overhauling of our entire Federal-pay structure is possible.

In addition, I am sure this subcommittee is aware of the letter from the Director of the Bureau of the Budget, to the Honorable Olin D. Johnston on May 6, 1957. In that letter the Director of the Bureau of the Budget clearly pointed out that this administration recommends against favorable consideration of any general pay increase bills. The Director of the Bureau of the Budget further states that the enactment of Federal pay increase legislation would not be in accord with the program of the President.

The President has pointed out that the Government, private business, and labor should at this time avoid actions which will increase inflationary pressures. Accordingly, we do not endorse legislation granting general pay increases for Federal employees.

Mr. Chairman, let me assure you that the Civil Service Commission and the administration are very mindful of the contributions made by our Federal employees to the important mission of the Government. We are very much aware of the need to treat our employees fairly. To get its job done the Government must employ persons skilled in the same types of occupations and professions found in private industry. Government, therefore, finds itself in competition with private employers in its effort to recruit desirable people. It is not practical for Government to meet this competition solely on a dollars and cents basis. It has never been done that way. It is quite well known, and the Commission is endeavoring to further publicize the fact, that Government can and does offer an employee, or prospective employee, many advantages which cannot be duplicated or equaled by private employers.

In this regard, in looking over the recent record of accomplishment I am very much impressed by what this administration and Congress in recent years have done to provide an environment of effective personnel management for our Federal employees. The extension and liberalization of many fringe benefits, and the strengthening of a true and meaningful career service has emerged as a result of the cooperative efforts between the administration and Congress. I can assure you that we who are now on the Civil Service Commission are interested in carrying on and advancing wherever possible the sound personnel programs now in effect.

To summarize, because it appears that a pay increase for Classification Act employees would create further complexities in an already distorted Federal pay structure, and because of the impact such increases would make on the national economy, wo do not at this time recommend enactment of the bills which you are now considering. My colleagues on the Commission agree with me in these statements. Mr. Chairman, I shall be glad to attempt to answer any questions which you or the other members of the subcommittee might have. Senator NEUBERGER. Senator Morton?

Senator MORTON. I have no questions, Mr. Chairman.

Senator NEUBERGER. Mr. Chairman, I would like to ask a few questions, if I may.

One of the paragraphs in your statement said:

the President has pointed out that the Government, private business, and labor should at this time avoid actions which will increase inflationary pressures. Accordingly we do not endorse legislation granting pay increases for Federal employees.

Is it not true that the President-and if I am not mistaken, the Secretary of the Treasury-have both expressly said that the Government does not favor the institution of price and wage controls over private business?

Mr. ELLSWORTH. I cannot remember specifically, Mr. Chairman. I think that would be generally the philosophy of this administration. Senator NEUBERGER. But, the administration does have a control over the wages-a legal control of the wages paid to Government employees.

Now, to my understanding the President's request, if I might say, or as you use the term, pointed out that "private business and labor should at this time avoid actions which would increase inflationary pressures" have been just so much language and nothing else. It has had no legal effect because there have been very substantial price increases and there have been wage increases in private business and all of this has caused a great increase in the prices that Federal workers have to pay for their food and shelter and clothing and recreation and medical care and everything else that they have to buy.

But, while letting private prices and wages just go up and up, the Government, in effect, has had a legal control on the wages paid to Federal employees.

I just do not see how that situation can continue without just having a degrading situation in the living standards of so many of these people.

Mr. ELLSWORTH. That was not exactly a question, Mr. Chairman, but I would like to comment to this extent: That the President and the administration does not set the rates of pay paid by the Government; that is done by Congress, and the President and the executive branch carry out that will.

In this case the committee and Congress has requested an opinion from the administration and from the Civil Service Commission and we give you our best thinking on the subject at the moment.

Senator NEUBERGER. However, I do not believe you can isolate the actions of Congress from the actions of the administration. To begin with, the President actually several years ago vetoed a pay bill in the realm of postal pay. The threat of a veto has been used at other times.

Furthermore, the President's party is a very strong minority in both branches of the Congress and certainly I would not like to think that the President and the administration were totally without influence in the policies followed by the minority party and, perhaps to some degree, by the majority party in the Congress.

Now, you cannot totally divorce the actions of Congress from these things when the administrative agencies involved, particularly your agency, comes up here and says that you do not favor a pay increase. We have to assume that you are talking for the President, who is going to have to sign any pay-increase bill or it will not become law unless it should be passed over his veto, and I do not think that would be particularly likely.

I just do not see, and again I come back to this, Mr. Chairman, how in view of the fact that there are no controls over the prices and wages at large in private industry which determine what these Federal workers have to pay, how you can ask us not to increase their wages. I just want to cite a couple of things.

Senator Javits mentioned some letters and you mentioned there are certain advantages of working for the Federal Government. I just have a few letters that I just picked up at random this morning. I had only a few minutes at my office before I came back from Cleveland and Indianapolis where I was speaking. They are not picked out and I just read them here this morning.

Here are examples of Federal employees. A postal worker who works 40 hours a week in the post office and gets $252 take-home pay per month. When a new baby came into the family he had to go to work in a filling station to make an additional $30 a week working 30 hours there. That means he now works a 70-hour week in order to finance the new baby.

Here is a letter from a housewife in Salem, the wife of a post-office clerk. You are familiar with these communities just as I am, Mr. Chairman, because you come from our State. They have $295 monthly take-home pay to take care of a family of eight which is virtually impossible unless he works part time on the side.

Here is a letter from a leading physician in Portland. He writes me this letter:

DEAR SENATOR: It seems in a country like ours it's something of a shame that the wife of a Government employee has to write a letter like this to her doctor. I am sure you'll do all you can to help the postal workers get a fair pay scale.

It is signed. He encloses the letter he received from this woman, the wife of a postal employee who is this doctor's patient. They have a bill overdue to the doctor of $8.50 a month, and this woman writes, Senator Morton, that when the head of the house brings home 2 checks a month which add up to the grand total of $260-this is a letter addressed to the doctor-even $8.50 can be quite a problem, and even impossible to pay.

pay

Now, I just do not see how situations like that can be permitted to continue, Mr. Chairman. I really do not. To me it is just a disgrace. I do not think these people would exaggerate. I do not think a letter written to a doctor would be exaggerated; a letter to a Congressman or Senator might be exaggerated but not to their family doctor. The doctor sent the letter on to me. I would like to have you look at it. Naturally, I am not going to put the names of these people into the record without permission. I am not trying to argue with you, Mr. Chairman, I am trying to think this out with you and Senator Morton. Unless the Government can control prices and wages outside which govern the cost of living of these people, we just have to adjust their pay. We cannot take it out of their hides if we are not willing to control the rest of the economy. That is just my feeling about it. Mr. ELLSWORTH. I appreciate your views, Senator.

Senator NEUBERGER. And I do not blame you. I do not want you to think this is anything personal. I realize you are very new in the Federal administrative agency service, you have just taken over and I realize that you have to come up here and I am not saying

you do not agree with it or do agree with it, but you have to express the policy of the administration.

In other words, How in effect can we keep wage controls on the Federal Government employees, whose pay is fixed statutorily, and not control the cost of living which they have to encounter every hour of every waking day of their lives? That is the only point I make. Senator MORTON. Well, Mr. Chairman, I suppose we are going to get testimony that relates this compensation to the cost of living. Undoubtedly certain witnesses are going to introduce testimony so that we can see percentagewise what has happened to the cost of living from the Bureau of Labor Statistics and we can then project that against what is happening in this field of compensation, from any base time we want to go back to.

Senator NEUBERGER. That is right. I hope we will get that and I am sure we will, Senator Morton, and also what has happened to the pay in private industry and nearly all major catagories at the same time in comparison and contrast to what has happened in the Government pay that is fixed by law.

Senator MORTON. Senator Javits introduced some figures comparing it with municipal pay scales in the city of New York. We might get some information from other municipalities and other government units.

Senator NEUBERGER. I have asked that from my State and I think we ought to get it from some representative States in various parts of the country.

Do you have any questions for the Chairman, Mr. Kerlin?

Mr. KERLIN. Yes, Mr. Chairman.

Mr. Chairman, can you indicate how many quits the Government had last year?

Mr. ELLSWORTH. I am sorry, Mr. Kerlin, I did not come prepared to give you that information. I think it could be furnished for the record.

Mr. KERLIN. I think it would be well to provide that for the record. I am under the impression the Government had over a quarter of a million quits last year.

Do you know what the replacement cost in terms of expense to the Commission and the agency is per quit to obtain a replacement?

Mr. ELLSWORTH. No, Mr. Kerlin; I have been on the job 4 weeks. and I have not gotten around to getting that type of information in my mind. I recall statistics that I have seen somewhere since I have been at the Commission that our rate of turnover is not excessiveI think it is less that private employment, but I cannot give you the exact figure. That, too, will be furnished for the record. (The above-mentioned information is as follows:)

QUITS IN THE FEDERAL GOVERNMENT

1. The number of quits of civilian employees of the Federal Government, continental United States, in fiscal year 1956, was 241,307. (The term "quits" includes resignations, abandonment of position, and movement between agencies.) 2. Comparison of quit rates per 100 employees, Federal Government and manufacturing industries, calendar year 1956:

1 Data compiled by the Bureau of Labor Statistics, Department of Labor.

3. Reliable figures are not available as to cost of replacing Federal Government employees and the cost of decreased production until new employees equal the production of experienced employees. Such estimates would be unreliable

due to the vast difference in skills recognized in the thousands of occupations in the Government, the difficulties of obtaining replacements, and the qualifications of individual appointees.

Mr. KERLIN. I think the record should indicate not just the replacement cost in terms of finding the replacement but also the cost in decreased production until the new employee hits the stride of the old employee. I think at one time the administration gave figures indicating that that was in the neighborhood of $2,800 but I think we should have the figures on that.

At one time the Commission used to hold an examination limited to 30 or 60 days and then it would be closed. The number of applicants would be very large. When the examination was held it provided quite a list from which to make selection and the Government got what might be considered the cream of the crop.

The trend recently has been to hold what they call open continuous examinations. Whenever a person comes in he is given the examination and if he obtains a passing grade—not a good grade but merely a passing grade-he, then, being the only one, would be eligible for appointment.

What would be your observation as to that approach as compared to the previous approach in terms of the type of personnel we are getting?

Mr. ELLSWORTH. I think there is no doubt but what competition which is the basis of our Federal career system is highly desirable. Competition for the jobs. That situation undoubtedly would ebb and flow with the trend of employment conditions in the country generally. It would be much preferable to have a number of applicants for every job.

Mr. KERLIN. You have read the Cordiner report, I presume?

Mr. ELLSWORTH. No; I have not seen that; it has not yet been made available to me.

Mr. KERLIN. I read of it first a couple of months ago in the press and we have had a copy for several weeks.

Mr. ELLSWORTH. Is that a copy of it there?

Mr. KERLIN. Yes, sir; I will be glad to make a copy available to you. Mr. ELLSWORTH. I am glad to see it. I had not seen one before.